A Study on the Introduction of Inheritance Tax System to resolve Income Inequality in China

Inheritance tax in China was first implemented during the Republic of China era. At that time, the Nanjing government proposed imposing an inheritance tax and enacted related ordinances, but it was not implemented. However, after the Anti-Japanese War broke out on July 1, 1940 and the national finances were in crisis, inheritance tax was officially imposed. However, inheritance tax was proposed several times as one of the taxes imposed after the founding of New China, but all of them were postponed. As the Chinese economy has grown rapidly since the reform and opening up and the gap between the rich and the poor has widened, personal income tax can no longer meet the need to adjust the income gap. As a policy tool to control this and as a way to narrow the income gap, the question of whether or not to impose inheritance tax has been revisited. It was once the people’s choice. However, considering the current situation of China’s economic level and the gap between the rich and the poor, the introduction of the inheritance tax is considered sufficient. Inheritance tax also has a positive meaning in improving the national tax system, properly adjusting the distribution of wealth among members of society, increasing financial resources for the government and social welfare programs, and maintaining national income. Therefore, in order for China to introduce and actually implement the inheritance tax system, it is necessary to establish a theoretically desirable basic direction. In other words, it is very important to clearly establish the purpose pursued by the national policy and to establish the basic direction to achieve the purpose well. On the other hand, when introducing the inheritance tax system, the tax conditions such as which inheritance tax method to choose, whether to separate or integrate with the gift tax, the determination of the minimum tax amount, and the tax rate should be tailored to the actual situation in China in consideration of the inheritance tax legislative principle, efficiency and fairness. You will have to decide. In addition, research on countries that are currently successfully operating the inheritance tax system and specific plans for detailed components to suit China’s situation should be established. This study focused on the implementation (proposal) of the Inheritance Tax Law, which was reviewed by the Chinese Ministry of Finance in 2010, and further research by experts is also required.